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US retailer plays chicken with notorious egg supplier

Jonathan Cooper-Bagnall
Jul 9, 2015 12:08:00 PM

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US retailer comes under fire for supplier failure

When a major, well-known and generally respected retail brand retains a supplier with a shady track record for food sourcing, it should hardly be a surprise when that supplier drags that retailer into a PR fiasco. In the recent case of a popular US retailer (which stocks everything from cleaning supplies to electronics to groceries), and Hillandale Farms of Gettysburg, the question of “the chicken and the egg” and which comes first is quite a literal one, as it relates to who gets the blame.

For years, Hillandale has supplied eggs to this retailer hatched from caged hens, a controversial practice that many reputable food retailers have eschewed. Last week, a video surfaced showing the disturbing and downright filthy conditions inside Hillandale cages that smacked of animal mistreatment. The New York Post used the word “horrifying” to describe the scene.

The fact that the retailer has been sourcing eggs from this supplier is no secret. And they’ve done so while essentially ignoring questions around Hillandale’s spotty track record; which includes their involvement as a possible source of a salmonella outbreak in Connecticut a few years back. Everyone from animal rights activists to the Connecticut Governor’s Office have urged the retailer to move to a cage free supplier. Eight years ago, the retailer announced plans to do so, but never made the move.

You could say the chickens came home to roost recently as the caged hen supplier finally dragged the retailer and its reputation into the mud. Once the video surfaced online, major US news outlets immediately scooped it up. They used it as an opportunity to not only question the retailer’s wisdom for continuing its supplier relationship with Hillandale, but also to excoriate the company for a history of questionable sourcing practices.

The retailer, a publicly listed company on the NASDAQ, has spent the better part of the last month fending off accusations and questions ranging from its implied endorsement of animal cruelty to the safety of the food products that line the aisles of their vast warehouse stores. Following the publication of the video, the retailer saw its share price fall for three consecutive days. Furthermore, media coverage of the story seems to have legs, with new stories published nearly a week later examining the retailer’s reaction and failure to take action.

The case of the retailer and Hillandale Farms is somewhat different from some of the other supplier-related failures endured by well-known brands. In this case, the retailer knew of Hillandale practices and had been confronted regarding its sourcing decisions in the past. For reasons that are difficult to understand from an outsider’s perspective, the retailer failed to take action, perhaps not recognizing the ramifications of enlisting a supplier with such a questionable record. Perhaps they are recognizing it now.

There is no company in the world that is immune to the failings of its suppliers. When a problem arises inside the supply chain, it’s the brand that takes the brunt of the punishment. Case in point, in a June 17th article on the issue, the supplier’s name isn’t even mentioned until the 7th paragraph, while the retailer’s name had been written 8 times up to that point. This is all yet another reminder that making smart choices and auditing the practices and ethics of suppliers goes hand-in-hand with any other activity a company might and should undertake in protection of shareholder value and reputation.

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